Revenue has cited the present economic situation after announcing extending the deadline for the Debt Warehousing Scheme from 1 May 2023 to 1 May 2024.

Businesses using the scheme now have an additional year to clear debt in warehouse or enter into a phased payment arrangement with the Revenue, and will still avail of a 3% interest rate on their debt, as opposed to the general interest rate of 10%.

The scheme was introduced to provide liquidity support to businesses during the pandemic, and statistics published by the Revenue show €2.2bn of the nearly €2.6bn in warehouse debt is owed by 7,500 taxpayers.

At the height of the scheme over €3.1bn was warehoused. There are now close to 50,000 tax payers with debts of less than €5,000 warehoused, and over 27,000 taxpayers with excessed debt in excess of €5,000, including 19,000 employers with over 315,000 employees.

"Revenue appreciates the very significant challenges that businesses are currently experiencing in meeting their tax obligations, arising from the impacts of the energy costs crisis and the financial pressures these have placed on businesses as they continue their recovery from the pandemic," said Joe Howley, the Collector-General.

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"This extended deadline in terms of debt remaining in the warehouse, and the ongoing availability of the reduced rate of interest of 3%, will provide businesses with greater certainty in the current economic climate and give them additional time before they have to start addressing the warehoused tax debt. 

"Where a business has the capacity to repay any or all of the debt warehoused in the meantime, then they can of course do so.“

Revenue will write to all businesses with debt in warehouse in early December setting out their state of debt in the warehouse and advising them of the extension.

Howley said it was important that businesses keep current returns and payments up to date, and that any businesses experiencing cashflow or temporary difficulties in meeting a tax liability contact the Revenue as soon as possible.

"As I have said on other occasions, early engagement allows us to work proactively with the business concerned towards finding an agreed solution to those temporary difficulties," Howley added.

"That agreed solution will, in turn, ensure that the business is able to continue to avail of the debt warehousing scheme.”

Howley said the scheme continues to be "important in sustaining employment and viable businesses" and that the extension would give businesses some certainty heading into the new year.

Elizabeth Bowen, interim director of the Small Firms Association, said the decision would be welcomed by many in the small business community.

"Government has listened to the calls of Ireland’s smallest employers and have now accepted the need for an extension of the Debt Warehousing Scheme," she said.

“The policy of tax warehousing was a major plank of the Government's Covid 19 response to support business. Many small businesses availed of this scheme to ensure that they could retain employees, remain trading or simply remain viable during this period.

"Unfortunately, these businesses are now facing significant cost pressures from rising energy, transport, insurance, materials, technology, and operating costs in general. Therefore, the extension of the timeline until May 1, 2024, is crucial to meet the current economic challenges."

Neil O'Donnell, CEO of ISME, said "a great many businesses are financially challenged this winter" and that some businesses will never recover from the effects of Covid-19 through normal trading alone.

"While vulnerable, these businesses remain viable once there is a realistic and objective assessment of their future trading prospects," he said.

"Therefore, while welcoming this moratorium on the collection of Revenue debts, ISME warns that even with a return to normal post-pandemic, and hopefully post Ukraine war trade, will not resolve the permanent scarring resulting from State-imposed lockdowns.

"Thousands of viable businesses will require restructuring when the economy returns to normal, and they will avail of the new SCARP process. The Revenue will have to recognise that it will have to fall in line with other creditors and accept that it cannot extract blood from a stone. A more realistic approach is required.”